“This is a great time to go to market,” Wes Hall with Public Financial Management Group said, when he addressed the school board during the operations meeting May 1.

The Salisbury Township School Board is examining refinancing two existing bonds; 2012A and 2012B, with outstanding principal balances of $5.3 million and $4.2 million respectively.

Hall said though the market had been volatile, rates have rebounded and “interest rates are at the lowest point for rates since the election.”

Hall proposed a “dual track process” where PFM would look into refinancing the debt through bonds as well as advertising a request for proposal for a bank loan from their network of banks.

Banks interested in securing the loan would have two weeks to review the term sheet and respond. In the interim, PFM would be “prepping for the bond issue, preparing the preliminary official statement and working with the credit rating agency.”

Once PFM receives the information for both the issuance of potential new bonds or a bank loan, they will review both options and determine which would be the more prudent choice for the district.

“The advantages to securing a bank loan are fewer fees and pre-payment of the loan without penalties, while bonds typically have a five year call,” according to Hall.

Board President Frank Frankenfield asked whether the loan would be a fixed rate loan.

Hall said the loans typically start off with a fixed rate for the first year and then change to a variable rate; however, both rates are fairly low and would have a “capped rate at 4.50 percent.” The district would also have the opportunity to refinance the loan at any time.

With the current interest rate, the district could realize a “net savings of a little over $191,000 on the refinance and PFM recommended the board set a “minimum net threshold savings of $150,000 to be able to pull the deal if needed.”

“At what time do we have to commit to making a decision on the loan,” Director George Gatanis asked.

“If we have authorization to proceed during the voting meeting on May 10, we can circulate the RFP for a bank loan on May 11, pursue the bond route and get the proposals back by the end of May to present the information to the board at the June 14 board meeting,” Hall said.

Another RFP discussed at the operations meeting concerned the district’s food service.

Board Secretary Robert Bruchak said he received several proposals and is currently analyzing and scoring the information.

To further explore the options presented, Bruchak said he and Superintendent Dr. Randy Ziegenfuss traveled to the Executive Education Academy Charter School to see Linton’s food service firsthand. While at the school, Bruchak said they were able to witness the food presentation, sample some of the food and speak to the staff.

Of the four vendors who presented proposals; SFE, Linton, Metz and Whitson, Bruchak said there were two vendors the district would consider.

“Factors driving our decisions include the bottom line, quality, increased participation, educational resources and a company that partners with the district and the students.”

The board is also concerned with any changes which may affect the current food service staff at the district and the transition process that would take place with a new vendor.

“This will be a painful process if we are going to be making some staffing changes,” Bruchak said.

Bruchak continued and said one of the food service companies noted the district is over-staffed by part-time food service employees district-wide.

“Since the RFP went out, we are down one food service employee who has not been replaced. Over time, the numbers will continue to decline due to attrition,” Bruchak said.

As the Salisbury food service employees retire, they will be replaced with the vendor’s food service management staff and based on projections, the district should realize a substantial savings.

“One of the issues plaguing the district is the pension fund. The district is currently paying 33 percent of salaries to the commonwealth for the fund,” Bruchak said.

“If we choose to do this, in the first year the district will not benefit from much savings; however, last year, the district lost $109,000 and we need to come under that while increasing quality as well as increasing students and adults who want to buy the food,” Ziegenfuss said.

“We are committed to not kicking out the current cafeteria workers, who are not necessarily administration, and eventually we will lose them through attrition,” Ziegenfuss said.

Should the board accept a proposal, the agreement would be for a period of one year with the option to renew.

The food service discussion will come before the board at the operations meeting June 5 with a vote to take place at the regular board meeting June 14.

In other business, Ziegenfuss said the board is always examining creative ways to impact the budget and recently, Chris Smith, coordinator of technology for the district, approached him regarding the current Apple software lease.

Smith gave the board a review of the district’s technology and said Salisbury is on year three of a 4-year lease on the software that held a 3-year warranty.

Based on recent repairs to the software, going forward with the equipment out of warranty, the cost to repair the technology would be $140,000 for the next school year.

Smith said 256 hard drives were replaced on the units this year alone.

While the school has the funds to make repairs to the technology, Smith noted the repairs would be made to equipment that will become obsolete in a year.

To refresh the Apple technology, the district would be able to use $200,000 worth of equity from the current technology to help balance the budget and pay down the first year of a new equipment lease. This option would require an additional $100,000 from the 2017-2018 budget.

The second option presented by Smith would be to take all the equity from the equipment and “front load” a new lease reducing the amount of the payments. This option, stated Smith, will not be advantageous to the budget.

“The administration is suggesting an equipment “refreshment” and elevating the technology budget by utilizing $100,000 already allocated in the repair fund for new technology,” Ziegenfuss said.

Ziegenfuss noted the equity in the current equipment is $600,000 with a final lease payment of $279,000.

“Part of the remainder could be used to pay the $148,000 gap in the 2017-2018 budget, preventing any additional cuts.”

Salisbury students in grades two through 12 utilize Apple laptops while younger students use Apple iPads.

The board agreed to go forward with refreshing the technology.

The proposed final 2017-2018 budget is in the “home stretch” according to Bruchak.

Improvements include a reduction of $29,000 in salaries due to attrition, a $12,000 reduction in benefits and the elimination of one of the buses for high school students.

“We are down to a $1.2 million budget gap with the total 2017-2018 budget outlining $35.7 million for revenue and $37 million in expenditures,” Bruchak said.

Bruchak said the gap will be bridged using a tax increase of 2.5 percent directed by the ACT I index, tapping into the fund balance and examining some other ideas including the technology refreshment and refinancing of existing bonds.

The board will be voting on the final budget at the June 14 board meeting.